STEVE
USDIN: What do shut downs and sequestration mean for science, medicine, and
public health? This week, we'll take the political temperature. And in the
Affordable Care update, we'll ask whether the exchanges can overcome a shaky
start. I'm Steve Usdin. Welcome to BioCentury This Week.

STEVE
USDIN: The government shutdown highlighted NIH's role in searching for cures
and America's reliance on FDA for safe food and drugs. In emotional press
conferences, members of Congress from both sides of the aisle warned that closing
NIH's campus and furloughing FDA staff were dashing hopes and hurting patients.

DEBBIE
STABENOW: The shutdown has hurt the ability, as we know, of the National
Institute of Health, also, the Center for Disease Control and Prevention and
the Food and Drug Administration.

RENEE
ELLMERS: I've seen these families. I've seen the looks on their faces when
they're given hope. We have taken that hope away, and we need to replace it. If
you are a family going to the NIH for care, it's because you are in a critical,
critical situation, that you are looking for that last bit of hope. And you are
looking for that treatment that will save your child's life.

STEVE
USDIN: Was this just political theater? Reopening government is one thing.
Funding NIH and FDA is another. Republican Representatives who pressed for
reopening NIH and FDA also supported budget sequestration that limited FDA's
ability to spend user fees and stripped over $1.5 billion from NIH's budget. As
NIH turned new patients away from clinical trials, Representative Jack
Kingston, a Georgia Republican, sponsored legislation to reopen NIH.

But
in February, he told BioCentury This Week that NIH Director Francis
Collins was exaggerating the harm caused by cutting research budgets.

JACK
KINGSTON: So what we're looking at with sequestration would be approximately
about a 5% cut to these agencies. So to say I got to operate on 95% of what I
did last year, that's not disastrous.

STEVE
USDIN: If austerity is here to stay, what's the right answer for taxpayers,
scientists, and patients? Today, we'll talk with an advocate for FDA funding.
But first, we're joined by two men who have spent years working on public
policy strategies for American science: Howard Garrison of the Federation of
American Societies for Experimental Biology and Kevin Wilson of the American
Society for Cell Biology. Jack Kingston, who controls or has more control than
anybody else does over the NIH budget, told me back in February that
sequestration, that cutting 5% from the NIH budget isn't a big deal, anybody
can live with that.

Michael
Burgess, Representative Burgess said something to me similar. There are a lot
of people in Congress who are saying that. What's your response to that?

HOWARD
GARRISON: With all due respect to the Congressman and the Chairman, I'd like to
ask them to walk a couple miles in our shoes. And we could show them the effect
that this has been having. It's really a series of waves. It's not just a 5%
cut. It's years of no growth funding in a very dynamic industry.

It
has been real budget cuts. It has been the uncertainty that this is causing. It
is now the disruption. And it is the threat of future cuts through
sequestration. So it's a series of things that are having a continuous impact
on the field. And it's really taking its toll.

STEVE
USDIN: So Kevin, can you give some examples of what the funding cuts, the
sequestration this year, some of the previous erosion in funding, what does
that really meant for science? What has it meant for medical progress for
patients, for people?

KEVIN
WILSON: The most important thing is that grants that would and should have been
funded are now, those scientists are not seeing their grant applications
approved. And it it goes from the rank and file scientist all the way up into
some most of the recent Nobel laureates. And among other things, it forces the
community to sit back on its heels, unsure about what the future is going to be
for their community.

The
sequestration and the shutdown are just, as Howard was saying, are just the
most recent insults to the community, starting all the way back with 2003. And
then from then on, the community has been having cut after cut, insult after
insult that have left real uncertainty in the community for the regular members
and for the next generation.

STEVE
USDIN: You mentioned the next generation. I think that's one of the bigger
concerns. What does it mean when you have this uncertainty and when you have
the real certainty of cuts that have happened? What does that mean for the next
generation of American science?

HOWARD
GARRISON: You need to understand about this community that you have some very
talented, highly motivated people that are really making tremendous sacrifices
of their time and their talent for the public good. This is a group of people,
the most altruistic community I've ever known. And so in addition to the value
that you get from their paycheck, you get their energy, you get their
intelligence, you get their devotion. They're in the labs seven days a week,
day and night.

And
if you don't allow them the opportunity to go forward and continue that work,
if you send a message that what they're doing is not valued, you have people
who are talented enough to be successful at a wide variety of occupations. And
you're losing this.

STEVE
USDIN: You guys have been at this for a long time. I've been covering for a
long time. Every time that we hear about somebody going up to Capitol Hill and
asking for funding for NIH for biomedical research, they're always asking for
more. And that's from the perspective of members of Congress. But they never,
as far as I know, they never give a number and say, well, what's enough?

Can
you put a number on it and say what would be enough, what's the level that
American taxpayers should be supporting biomedical research? What's the delta
between where we are at now and what would be enough?

HOWARD
GARRISON: Well, it depends on what your criteria are. I think that the
opportunities in biomedical research are outstanding. There are tremendous
opportunities to progress on a wide range of fields. There are a number of
initiatives coming out of NIH, the brain initiative, the cures acceleration
initiative. The opportunity to absorb -

STEVE
USDIN: That's still the more answer. Is there a number?

KEVIN
WILSON: Let me try to answer your question a little bit higher up. I think,
number one, it depends on what, as a country, we want from the research
community. And number two, I think if you compare it to what the expected cost
of not supporting research, then that will give you a framework of what is it
that we expect? And if we don't do anything, what will the real cost be?

HOWARD
GARRISON: Another example is we are still the leading nation in terms of
biomedical research and a number of other fields. But as we dismantle our
research enterprise, as we underfund it, as we cut it, as we dismantle it, we
are losing funding. We are losing our world dominance.

STEVE
USDIN: As we've discussed, NIH's budget has been under pressure for years.
Here's a look at how inflation has eaten away at biomedical research funding.

[MUSIC
PLAYING]

NARRATOR:
You're watching BioCentury This Week.

SEGMENT 2

STEVE
USDIN: We're back with science policy veterans Howard Garrison and Kevin
Wilson, talking about shutdown, sequestration, and science. So we've seen
there's this delta, this gap between where funding in real numbers is and what
it is after inflation. It's a big gap, billions and billions of dollars.

Is
it realistic to think that gap could be made up? Is that something in the
foreseeable future that you think Congress could do?

HOWARD
GARRISON: It's a goal that I think as a nation we must strive for, whether we
can do it next week, next month -- probably not. But it certainly is our goal
to regain what we've lost and to continue to expand, to make this country the
leader in research that it's always been, to keep it that way.

KEVIN
WILSON: I think it's a case of, the question is, is there the political will?
In the past, there has been the political will to take these grand steps.
Unfortunately, I don't think that there is the political will right now. But
again, it is a case of what do we want? What do we want to pay for?

Do
we want to pay a small amount of money for a large investment, literally an
investment in the future? Or do we want to wait and pay even larger amounts of
money for caring for the diseases that we won't be able to cure?

STEVE
USDIN: So when we're talking about political will, I talked to somebody
recently whose job it is to go up to Capitol Hill and talk to members of
Congress about science. And he said to me, how can I even do this when there
are members of Congress that publicly say that they don't believe in evolution,
for example, and they don't want it taught in the schools? There isn't this
public, political will for science among the politicians.

HOWARD
GARRISON: Well, there's a wide range of opinions on Capitol Hill. I think when
you stop and ask people about the value of medical research, I think people
largely appreciate what it can do. I think it's our job as citizens who care
about science and care about what science does for this country to be more
vocal.

STEVE
USDIN: So one of the other things maybe, is it time also to say, yeah, you want
to get that delta made up, you want to get more? It's not going to happen, as
you said, next week, next year. Are there things that we have to do, that the
scientific community has to do, and that NIH has to do to live within the money
that it's got now better, basically to accept this austerity and to make some
changes to squeeze more science out of the money.

HOWARD
GARRISON: Well, NIH and the community are going to make those decisions.
They're going to be extremely difficult. And they're going to have a huge cost,
no matter what decisions are made, because valuable science will not be done,
important research will not take place. So it will hurt. And so those of us who
care are looking not only at that delta, but at ways that we can go back to
where we once were. This is a country that's always supported science.

STEVE
USDIN: What are those trade-offs? Are there some kind of concrete things that
members of Congress ask you and say, well, if we don't get that delta back,
what are we going to lose? And does it have to be just across the board? Or are
there some discrete things you say, well, we're not going to be able to do
this?

KEVIN
WILSON: Well, I think that one of the responsibilities that is connected with
the question that you're asking is internally, as a community, we have to
remove the stigma that currently exists about that is, the only way that you are
a successful scientist is if you are working in an academic bench. There is a
lot more to science than working at an academic bench and a lot more to science
that is very important in moving us down the road to developing cures and
treatments.

And
right now, as a community, that stigma still exists. And it needs to change.

STEVE
USDIN: So there's another issue which that plays into, which is, are we just producing
too many Ph.D.s now who don't have any realistic expectation that they're going
to become principal investigators, that they're going to get funded? Do we need
to dial back on the number of Ph.D.s?

KEVIN
WILSON: The only reason that's a problem is because currently, anything other
than working at an academic bench is viewed as failure. That's where the
problem exists. There is plenty of work that needs to be done in industry,
taking basic research advances and taking it to market. There are scientific
jobs there that are critical that need to be done, as well as other places.

STEVE
USDIN: Well, thanks very much. That's an interesting topic and something we've
talked about on the show before, and we will going forward. We've been discussing
the effects of the shutdown and sequestration on basic science. The road to new
therapies may start at NIH, but it must run through FDA. More on that in a
moment.

NARRATOR:
Healthcare is changing. And we're changing, too. Each week, watch BioCentury's
Affordable Care update, a special part of every show, dedicated to keeping you
informed about this unprecedented transition. And watch all of the weekly
updates in one place at any time, only at biocenturytv.com.

SEGMENT 3

NARRATOR:
Now, back to BioCentury This Week.

STEVE
USDIN: We're talking about FDA's budget with Steven Grossman from the Alliance
for a Stronger FDA, an advocacy organization.

Steven,
reopening the government is one thing, but funding agencies is another. We've
been talking about that for NIH. But it's also an issue for FDA. What has
sequestration meant for FDA, and what would it mean if it continues?

STEVEN
GROSSMAN: What it meant for FDA was $209 million less to spend in FY13 than it
did in fiscal year 2012. And at the same time, the agency is getting new
responsibilities and globalization and scientific complexity makes their job
harder.

STEVE
USDIN: What's you're kind of 'ask' as they say in Washington? What do you think
Congress should do minus sequestration? We're leaving sequestration out of the
picture for FDA. How much more do they need?

STEVEN
GROSSMAN: Well, we've asked for about $80 million, $80 to $90 million higher
than the FY12 base. And that would be $2.6 billion in appropriations. So that's
still a modest increase given that they're implementing the Food Safety
Modernization Act. They've got all of the requirements under the FDASIA. And
there's just more to do. They're about to get legislation on compounding and
track and trace.

The
agency, unlike NIH, unlike CDC, is all people. It's all services. And so 80% of
the FDA budget is salaries, rent, benefits, and such. The work output and the
budget are very sensitive to each other.

STEVE
USDIN: So what do you hear when you go to the Hill to talk about FDA's budget?
Is their pushback about FDA specifically, or is it just caught up in the bigger
fiscal crunch?

STEVEN
GROSSMAN: FDA is definitely caught up in the bigger crunch. In fact, the
authorizing committees have made very clear that they see FDA as necessary and
important. In a time when there's not much legislation passing, there's been
three, four major pieces of legislation over the last three years affecting FDA
in changing and expanding its jurisdiction and its jobs.

You
go to the appropriators and you look for the fiscal year that we're about to be
in with all the downward pressures, both the House and the Senate were working
on bills where FDA got a net increase.

STEVE
USDIN: That's before sequestration, right? So if we have sequestration going
forward, what is that going to mean for FDA, and what are the things that won't
happen that would have happened if they'd had that extra money?

STEVEN
GROSSMAN: OK, well first of all, how much sequestration there is is dependent
on a lot of other factors that have nothing to do with FDA. Under one
variation, all of the sequestration will be fairly minor and all come out of
defense. On other scenarios, it could take 5%, 6%, 7% of FDA's budget.

This
past year, in FY13, FDA lost $209 million. That was $124 million from the
appropriation and $85 million from user fees. What did that not pay for?

Well,
everybody worked harder because some of the work just has to be done. New
program initiatives came very slowly. Inspections weren't increased, even
though the law calls for that. New regulations, most of them called for by
either Food Safety Modernization Act or FDASIA -- slower. People aren't getting
to the work because there's so much and there should be more bodies. You've got
offices that should have 10 people that are dealing with 6 or 7 and threatened
with less.

STEVE
USDIN: And there are things, you mentioned FDASIA that's a law that was
supposed to improve a lot of things at FDA, the way they work, particularly on
drug development. Some of those positions aren't being filled, right?

STEVEN
GROSSMAN: That's correct. And particularly, the patient priority that comes out
of that law calls for a lot more activity on FDA's part to reach out to
stakeholders, to provide more opportunities. Each of those takes time. And each
of them represents some portion of an employee's time to get it done.

STEVE
USDIN: Steven, most people think of the FDA, to the extent they think about it
at all, as kind of a cop on the beat. It's preventing bad things from
happening, bad drugs from getting on the market, bad foods from getting on the
market. Is that really the best way to think about it?

STEVEN
GROSSMAN: No, FDA is both a public health and a regulatory agency. And it does
have enforcement as well. So one part is the inspections. That's an important
part. The Agency is also involved in providing some support for the food safety
in this country, which is a huge industry. In addition, it's the source for new
drugs and devices which represent hundreds of thousands of jobs. And certain
segments are export positive, so they're things that the rest of the world
want.

STEVE
USDIN: So one of the things that's been the hallmark of Commissioner Hamburg's
tenure as FDA Commissioner has been regulatory science, and her push for
injecting more science, newer science into what FDA does. And it's like a lot
of good ideas, when she first proposed it, people dismissed it. Then people
thought, well, it's not really the right time for it. And now, everybody says
it's obvious. But the real question is whether she has the money to do it.
Whether FDA has the money to push regulatory science forward now.

STEVEN
GROSSMAN: I don't think they do. I think that the budget increases have been
very small. The fact that the agency has gotten any increase at all is a sign
of congressional support, but it's not sufficient. And it's going into
frontline food safety and drug safety issues. Regulatory science really has had
to take a back seat.

New
money has been found by -- what Congress always wants is for the agencies to be
more efficient. And some of what FDA has done to become more efficient has been
reinvested in regulatory science, but it needs a lot more work. And it needs to
be based on the fact that the future is going to present ever more complex
drugs and devices, and the Agency needs the tests. It needs the measurement
tools to be able to evaluate them fairly.

STEVE
USDIN: So one of the things that it does have that other agencies in government
don't have is a large amount of money from industry -- user fees. One of the
issues that's been happening with sequestration though, is some of those user
fees are being held back. FDA can't spend them. How much is it that's been held
back, and what effect does that have?

STEVEN
GROSSMAN: As part of the sequestration, FDA lost $209 million of which $85
million was from user fees. That portion is - everybody's scratched their head
about that. Supposedly that's the way the law is written, but that's industry
money and it really doesn't contribute in any way that any of us understand to
lessening the federal debt.

STEVE
USDIN: Thanks. Up next, the health exchanges are off to a rocky start. Can the
Affordable Care Act get back on track?

SEGMENT 4

STEVE
USDIN: Obamacare critics are pointing at dysfunctional websites and saying "I
told you so" and reiterating calls for delaying the exchanges or the
individual mandate. Even supporters of the law are cringing. To discuss the healthcare
exchange's rough start, I'm joined by Dan Mendelson, CEO of Avalere Health.

Dan,
what's the deal? Is this going to be kind of a fatal blow for the Affordable
Care Act or just a bump in the road?

DAN
MENDELSON: Well, there's no question that the failure of the federal exchange
website is a big embarrassment for the Administration. You try to log on, you
get error messages. And it is slowing people down right now. There's no
question.

I
think it's important to remember that we're just now three weeks into a
six-month open enrollment period. So this does have some time to succeed. I think
that it will come around.

STEVE
USDIN: So you think that the people who have tried to log on and failed, are
they going to come back?

DAN
MENDELSON: Yeah, they'll come back. I mean, look, first of all, if you go out
to make a purchase of this magnitude and you're delayed a little bit, you're
going to come back to buy. And then, I think it's also fair to say that the
real advertising hasn't even started yet because plans know that consumers
generally make these purchases closer to their real deadlines.

We'll
have a deadline in December for coverage to start in January. I think that's
really the first time that you'll truly be able to assess what enrollment is
likely to be.

STEVE
USDIN: That's December 15, right, is the cut-off -

DAN
MENDELSON: Yeah, it's December 15 to get covered -

STEVE
USDIN: - to be able to get coverage starting January 1st. We know some things
more now than we did before the exchanges opened up about what coverage is
going to look like. One thing that's interesting that the country may be split
between red and blue when it comes politically, but for health insurance, it's
blue. It's Blue Cross, it's the affiliates of blue, right?

DAN
MENDELSON: Yeah.

STEVE
USDIN: What are the numbers on that? What does that mean?

DAN
MENDELSON: Yeah. In our research, the blues are consistently offering
lower-cost plans and they're offering them across really all states - in most
states. I think what we'll see in terms of enrollment is that the blues really
will be picking up a lot of patients.

And,
look, they're generally very strong, if not dominant, in their markets. They
have a strong presence across different types of insurance products. And if
they slip in 5% more patients into a market, that's a good thing for them.

STEVE
USDIN: There have been - just kind of a quick update on some of the other
issues that have been in the news. One of them has been increased calls for
income verification as part of some of the deals that might fund the
government. What's the issue there?

DAN
MENDELSON: CMS is doing some income verification. Income is verified by the IRS
on a kind of a look-back basis. Republicans in Congress want more. They want
more careful assessment. They also want to shine some light on this issue so
that they can use that to show that they got something for this whole shutdown
and the deficit fight.

STEVE
USDIN: Do you think they're going to get it? Will it make a big difference if
they do or not?

DAN
MENDELSON: Yeah, I do. I think they will get an acknowledgment that more income
verification is necessary. Whether it makes a big difference or not, it's a
little hard to say. I think it's good ultimately for these programs to have
strong income verification because, in the end, it does reduce fraud and it
makes the programs tighter.

STEVE
USDIN: So very quickly, one of the other issues that's been in the news has
been coverage of Members of Congress and their staffs and White House
officials. What's that all about?

DAN
MENDELSON: Yeah. This is a showboat issue, honestly. I mean, it will not affect
most Americans. The issue though is that if they are getting some subsidies,
it's politically difficult to take those subsidies, particularly for members
who oppose the law.

STEVE
USDIN: Basically, what's happening is that there are members of Congress who
are saying that the congressional staff and White House staff and members of
Congress shouldn't get a subsidy that employees all over the rest of the
country generally get.

DAN
MENDELSON: Yeah. I mean, this is an issue like congressional pay. It becomes a
visible issue and one that they like to fight about right around election time.